1. Bentley records adjusting entries on December 31 year end.

At December 31, employees had

earned $14,000 of unpaid and unrecorded salaries. The next payday is January 3, during which
$34,000 will be paid. Prepare the January 1 journal entry to reverse the effect of the December
31 salary expense accrual.
Debit Salaries expense $14,000; credit Salaries payable $14,000.

Debit Salaries expense $20,000; debit Salaries payable $14,000; credit Cash $34,000.

Debit Salaries payable $20,000; credit Cash $20,000.

Debit Salaries payable $14,000, credit Salaries expense $14,000.

Debit Salaries expense $20,000; credit Salaries payable $20,000.

2. Bentley records adjusting entries on December 31 year end. At December 31, employees had
earned $16,500 of unpaid and unrecorded salaries. The next payday is January 3, during which
$39,000 will be paid. Prepare the journal on January 3 to record payment assuming the correct
adjusting and reversing entries were made on December 31 and January 1.
Debit Salaries expense $16,500; debit Salaries payable $22,500; credit Cash $39,000.

Debit Salaries expense $39,000; credit Cash $39,000.

Debit Salaries payable $39,000; credit Cash $39,000.

Debit Salaries expense $22,500, debit Salaries payable $16,500; credit Cash $39,000.

Debit Salaries expense $22,500; credit Cash $22,500.

3. The Unadjusted Trial Balance columns of a work sheet total $85,400. The Adjustments columns
contain entries for the following:
 
1. Office supplies used during the period, $1,900.
2. Expiration of prepaid rent, $1,400.
3. Accrued salaries expense, $1,200.
4. Depreciation expense, $1,500.
5. Accrued service fees receivable, $1,100.
   
The Adjusted Trial Balance columns total is:
$78,300.

$85,400.

$89,200.

$89,400.

$92,500.
 4. ABC Corporation's total quick assets were $4,888,000 its current assets were $12,700,000 and
its current liabilities were $7,500,000. Its acid-test ratio equals (Round your answer to 2 decimal
places):
0.65.

2.35.

1.53.

1.69.

0.59.

4,888,000 \ 7,500,000 = 0.65

5. Benson Company had cash sales of $100,275, credit sales of $89,450, sales returns and
allowances of $3,700, and sales discounts of $5,475. Benson's net sales for this period equal:
$186,025.

$189,725.

$184,250.

$100,275.

$180,550.

Cash sales = 100,275

Credit sales = 89,450

Total sales = 189725

Net sales = 189725 – 3700 – 5475 =180550

6. Brig Company had $810,000 in sales, sales discounts of $12,200, sales returns and allowances
of $18,200, cost of goods sold of $388,000, and $276,000 in operating expenses. Net income
equals:
$779,600.

$403,800.

$391,600.
 $115,600.

$409,800.

Total sales – sales discounts – sales returns on allowances – cost of goods sold – operating expenses

7. A company had the following purchases during the current year:

  January:  16 units at $126

  February:  26 units at $136
  May:  21 units at $146
  September:  18 units at $156
  November:  16 units at $166
 
On December 31, there were 56 units remaining in ending inventory. These 56 units consisted of 8 from
January, 10 from February, 12 from May, 10 from September, and 16 from November. Using the specific
identification method, what is the cost of the ending inventory?
$8,336.

$8,170.

$7,088.

$8,502.

$6,976.

8 * 126 = 1008

10 * 136 = 1360

12 * 146 = 1752

10 * 156 = 1560

16* 166 = 265

Total = 8336

8. On September 30 a company needed to estimate its ending inventory to prepare its third quarter
financial statements. The following information is available:
Beginning inventory, July 1: $4,400
Net sales: $44,000
Net purchases: $45,000
The company's gross margin ratio is 15%. Using the gross profit method, the cost of goods sold would
be:
$5,400.

$27,600.

$23,200.

$37,400.

$4,400.

44,000 *15% = 6,600

44,000 – 6,600 = 37,400

9. A company that has operated with a 30% average gross profit ratio for a number of years had
$111,000 in sales during the first quarter of this year. If it began the quarter with $19,100 of
inventory at cost and purchased $73,100 of inventory during the quarter, its estimated ending
inventory by the gross profit method is:
$30,300.

$33,300.

$19,100.

$23,310.

$14,500.

Sales = $111,000

Gross profit = 33,300

Cost of goods sold = 77700

Inventory = 19,100

Purchases = 73,100

Cost of goods available for sale = 92,200

Less: cost of goods sold = 77,700

Ending inventory = 14,500

 10. A company normally sells its product for $25 per unit. However, the selling price has fallen to $20
per unit. This company's current inventory consists of 250 units purchased at $21 per unit.
Replacement cost has now fallen to $18 per unit. Calculate the value of this company's inventory
at the lower of cost or market.
$4,600.

$5,000.

$4,500.

$5,250.

$4,450.

250 units @ $18 per unit = $4,500